A developmental approach to the effects of scarcity on judgment and decision-making

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Scarcity has a profound impact on judgment and decision-making. Imagine that you are buying a bottle of wine and deciding between two brands. There is not much information you can rely on for a well thought-out decision, as the two brands are equally unfamiliar and the difference in their prices is negligible. However, they differ in relative frequency, in that one brand is abundant whereas the other one is scarce. Chances are you may judge the scarce one as better and prefer it to the abundant one. This decision-making process is an example of the scarcity effect, that is, scarcity enhances perceived value and desirability of things. Marketers and advertisers have long been capitalizing on this effect, by using tactics such as “available for 3 days only” and “limit one per person” to influence people’s purchase decisions. This effect applies not only to economic behaviour, but also to judgment and decision-making about resources, information, opportunities, experiences, and personal characteristics. The commodity theory describes the psychological effects of scarcity on decision-makers: Anything that can be owned, is useful, and can be transferred from one person to another will be valued to the extent that they are scarce or hard to obtain. Subsequent studies have provided a substantial body of empirical evidence supporting this theory. Three possible mechanisms have been proposed to explain how the scarcity effect arises: Scarcity can a) serve to people’s need for uniqueness, b) threaten people’s freedom of choices and lead to motivational arousal, and c) serve as a heuristic or rule-of-thumb. These mechanisms may point to the evolutionary implications of the scarcity effect. Supporting this, the effect has been observed in some animals. Thus, the scarcity effect may have evolutionary significance, and if so, it should be present early in development. Surprisingly, all previous studies on the scarcity effect have focused exclusively on adults. No studies have yet examined it from a developmental perspective. The proposed research aims to address this gap in the literature. In three series of studies, I investigate a) the developmental origins of the scarcity effect on judgment and decision-making (e.g., whether the scarcity of objects enhances their perceived value and desirability for young children, and if so, when this effect emerges in development); b) possible moderators of the scarcity effect on older children (e.g., whether older children take into account the attractiveness of objects and the cause of scarcity when they make a judgment or decision about scarce vs. abundant objects), and c) possible mechanisms that may induce the scarcity effect on younger children (e.g., whether covariation of attributes and motivational arousal due to threat to freedom of choices can induce the scarcity effect on younger children). The proposed research has significant theoretical and practical implications. Theoretically, it will advance our understanding of how scarcity influences human judgment and decision-making from a developmental perspective, an approach that has not been studied in the past. The findings will contribute to the discussions about the possible evolutionary implications of the scarcity effect, and will be of broad interest to psychologists, anthropologists, biologists, behavioural economists, and researchers in marketing and advertisement. Practically, this research is likely to appeal to the general public. The perception of scarcity is a major influence on our everyday judgments and decisions, from making daily purchases, choosing gifts, selecting mates, to competing for resources. Studying the developmental trajectory of the scarcity effect may yield insights pertinent to all of these practical issues.